Pianalto: Fed paved way to recovery

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Sandra Pianalto, who is retiring as president of the Federal Reserve Bank of Cleveland early next year, did not comment on monetary policy in a speech on Thursday but reflected on the U.S. central bank's swift and effective response to the 2008 financial crisis.

"I think it is widely acknowledged that the Federal Reserve's actions helped prevent an even bigger crisis, and put the nation's economy on a path to recovery," Pianalto told a conference on housing and inequality at her Fed branch.

Pianalto urged lenders to offer customers products that make it easier and more understandable for them to buy or rent homes. "There is no need to wait for regulators to require such behavioral features," she said.

"A little imagination and collaboration could go a long way toward a financial marketplace with fair play, more financially resilient households, and profitable financial institutions," she said.

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Pianalto did not vote on the Fed's surprise decision on Wednesday to hold off reducing its $85 billion monthly bond-buying program, a move that sharply boosted stocks. Last month, she suggested the Fed could soon reduce the quantitative easing program, but she did not discuss it on Thursday.

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The Fed is still picking up the pieces from the crisis and resulting Great Recession, which has left in its wake anemic economic growth and high unemployment.

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Referring to the Fed's 2008-2009 crisis response, Pianalto said "Under the leadership of Chairman Ben Bernanke, my colleagues and I came together to initiate swift and aggressive responses, often using unconventional and innovative tools."

—By Reuters